Eaga frozen out of Warm Deal
The Scottish Executive has dropped the UK’s most successful social enterprise, Eaga Group, from its fuel poverty programme in favour of British Gas, weeks after promising to open up more public sector contracts to social enterprises.
Communities Scotland has awarded preferred bidder status to British Gas – which is at the centre of controversy after a string of price rises – for the government’s central heating and Warm Deal programmes, currently by far the biggest state contracts awarded to a social enterprise.
The programmes offering grants to the over-60s for insulation and energy-efficient central heating are currently run by Eaga, which is owned by its 1600 employees and reinvests its profits back into the community rather than paying shareholders. Based in Newcastle, it has been working on the programmes across the UK since it was set up for the purpose in 1990 and holds similar contracts in England, Wales and Northern Ireland.
It installs 90,000 domestic boilers and insulates 150,000 UK homes a year, and has growing businesses in the Republic of Ireland, Canada and India.
In February, Charles Berry, the former ScottishPower executive, joined as chairman, and at the end of May the group announced the acquisition from construction group Tulloch of the Everwarm group, a major Scottish contractor. The group’s chief executive, John Clough, said at the time Eaga was ‘investing in building high quality capacity in Scotland’s energy efficiency and heating sector’.
The Scottish Executive in June launched a strategy document which said: ‘Social enterprises already deliver a range of high quality public services in an efficient and cost-effective manner . . . We recognise there is a need for a lead at central-government level, particularly to make sure more public sector opportunities are accessible to social enterprise.’
A spokesman for Eaga said: ‘I can confirm that Communities Scotland has informed us that we are not their preferred bidder. As the UK leader in tackling fuel poverty, we are very proud of our record in tackling fuel poverty in Scotland.
‘Over the past four years we have worked with Communities Scotland and other partners to lift over 90,000 elderly and vulnerable people across Scotland out of fuel poverty, doing so efficiently and professionally.’
He added: ‘By continuing to invest in Scotland we aim to become the leading residential energy efficiency provider in the UK and a leading global player in that growing market.’
A Communities Scotland spokesman said: ‘I can confirm that following a full tender exercise as required by procurement regulations Communities Scotland is in discussions with a preferred bidder. An announcement is expected shortly.
‘The tender exercise has sought to get best value and the greatest number of installations of central heating and insulation for vulnerable people in Scotland from the investment made.’
Jon Molyneux, policy and communications officer for the Scottish Social Enterprise Coalition, said: ‘It is not appropriate for us to comment on individual contract negotiations, nor do we expect social enterprises to win and keep contracts by right – they must deliver both quality and value for money for the customer.’
But Molyneux said the decision raised wider issues. ‘Under EU rules, procurement officers can select contractors based on their ability to deliver specified social and environmental benefits relating to the main aim of the contract.
‘Because the public sector exists first and foremost to deliver community benefit, we want to see key public agencies – like the Scottish Executive – actively championing a positive procurement agenda and using social clauses in contracts to deliver greater levels of community benefit.’
Brian Tannahill, chief executive of Scotland’s most successful social enterprise McSence, has written to Jack McConnell, first minister, asking for clarification.
Tannahill writes: ‘Knowing the benefit social enterprise can bring, I was delighted when all political parties included an agenda for social enterprise in their manifesto at the last election, and it has also been enlightening to find social enterprise has been given a minister in the Cabinet Office. This, together with the recently issued Scottish Executive consultation, led me to believe there was a significant groundswell of support.
‘Imagine my surprise when the biggest contract social enterprise has from the government in Scotland appears to have been taken away from the sector and, if rumours are to be believed, the preferred bidder is a multi-national energy provider.’
Tannahill adds that Eaga’s contract expired on March 31, with a temporary extension put in place. ‘It is my understanding that the new contract is still to be signed. Already as the extension period comes to an end, installation companies are struggling to sustain employment.
‘There have already been significant redundancies, and at least two organisations have been forced out of business. Some of these installation companies are also social enterprises and others have contributed to New Deal employment.
‘Further delays will inevitably mean the loss of more livelihoods. This is over and above the impact delay has on the most vulnerable members of our society, as there will be an inevitable reduction in the number of homes that can have measures installed prior to the onset of winter.’
Tannahill has asked McConnell: ‘With this as a background, we would ask our politicians and those in authority to make decisions to consider what it really is that delivers best value to the people of Scotland when placing major government contracts.’